| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -0.2% | -0.3% to 0.3% | 0.2% | -0.1% | -0.1% |
| Year over Year | 5.3% | 6.6% | 6.7% |
Highlights
The seasonally adjusted FHFA house price index for January is up 0.2 percent month-over-month in January compared to a dip of 0.1 percent in December. The index is 5.3 percent higher than January 2022. The monthly percent change is above the consensus of down 0.2 percent in an Econoday survey.
The value of homes in resales and refinancing is up after two months of declines, while the year-over-year increase is the lowest since up 5.1 percent in May 2020. The period of rapid escalation in existing home prices is winding down. It also looks like the decline in home prices associated with the impact of higher mortgage rates on the housing market may be bottoming out.
The spring homebuying season may help support home prices due to another dip in mortgage rates that could bring some potential homeowners into the market while home affordability is improved.
The value of homes in resales and refinancing is up after two months of declines, while the year-over-year increase is the lowest since up 5.1 percent in May 2020. The period of rapid escalation in existing home prices is winding down. It also looks like the decline in home prices associated with the impact of higher mortgage rates on the housing market may be bottoming out.
The spring homebuying season may help support home prices due to another dip in mortgage rates that could bring some potential homeowners into the market while home affordability is improved.
Market Consensus Before Announcement
The house price index has flattened out, coming in marginally changed to unchanged the last four reports. January's consensus is a monthly fall of 0.2 percent.
Definition
The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing, using data provided by Fannie Mae and Freddie Mac. The House Price Index is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. In contrast to other house price indexes, the sample is limited by the ceiling amount for conforming loans purchased by these government-sponsored enterprises (GSE). Mortgages insured by the FHA, VA, or other federal entities are excluded because they are not"conventional" loans. The FHFA House Price Index is a repeat transactions measure. It compares prices or appraised values for similar houses.
Description
Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can dampen housing starts. Changes in home values, and the ability to draw upon expanding lines of home equity loans, play key roles in consumer spending and in consumer financial health.
Beginning with the onset of the subprime credit crunch in mid-2007 and with it a downturn in home prices, the ability of borrowers to refinance their debt into affordable fixed rate mortgages was sharply constrained. This in turn limited aggregate consumer spending and contributed to the depth of the Great Recession. From its peak in 2007 to its nadir in 2011, FHFA's house price index fell nearly 30 percent. The subsequent recovery proved slow but steady with the index finally surpassing its prior highs in 2016.
Beginning with the onset of the subprime credit crunch in mid-2007 and with it a downturn in home prices, the ability of borrowers to refinance their debt into affordable fixed rate mortgages was sharply constrained. This in turn limited aggregate consumer spending and contributed to the depth of the Great Recession. From its peak in 2007 to its nadir in 2011, FHFA's house price index fell nearly 30 percent. The subsequent recovery proved slow but steady with the index finally surpassing its prior highs in 2016.
